March 18, 2014

Financial Tuesday: How to Actually Pay Your Taxes

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So you’ve reached the point where you’ve done all the
paperwork and now it’s time to actually fork over your hard earned cash to
Uncle Sam. Only you’re not entirely sure how to do that. You’ve been so focused
on actually filing taxes you haven’t even considered what the process for
paying is.

Do they take checks? PayPal? Credit cards? What are your
options here? In fact you have a few avenues at your disposal, including one
that the IRS has set up to be a quick, mostly painless way to satisfy your tax
obligations.

Credit
Card

This is the best scenario: you have a payment but it’s small
enough that you can afford to pay it all right away. No payment plans, no more
worrying; just one payment and you’re done. Well, you’re in luck, because the
IRS takes credit cards.

But, of course, there’s a catch. They don’t take credit
cards directly. You have to go through a payment processor. You already have a
PayPal account, can you use that? Nope. There are a select number of
processors that take IRS payments, all with varying fees attached to
them.

It may be annoying, but at least your obligations are
satisfied. Now you can move on to bigger and better things – like literally
anything else!

Payment
Plan

Can’t pay your tax obligations all at once? Then you’re like
most taxpayers out there who owe money to the government. If you fall in this
category, then you need to set up a payment plan. Luckily, it’s fairly simple.

First you must apply for the
payment plan. You can apply online if you owe less than $50,000 or
submit the Form 9465 and Form 433-F tax forms if you owe more than that.
Generally, you’ll be approved for the payment plan automatically, so you
shouldn’t worry about being denied. The IRS wants the money you owe and they’re
happy to go the route you want.

Now every month you’ll make a payment to the IRS, which can
be automatically set up to come out of your bank account on a day you choose.
The payments will continue until you’ve paid everything off.

Keep in mind if you have another payment come up during next
year’s taxes, it doesn’t automatically add to your current plan. You must
submit a new payment plan form and it will be added to your current payments.
If you don’t, you’ll have an outstanding balance and could face penalties.

EFTPS

As mentioned, the IRS has set up their own site for
taxpayers to pay what they owe. Even better for small business owners, this
system, the Electronic Federal Tax Payment System (EFTPS), lets you pay both
federal taxes and other obligations like quarterly estimated taxes.

Simply head to the EFTPS website and click Enroll. Here
you’ll enter some basic info for your business or your personal use like name,
address, social security number. You’ll also enter your bank information so you
can automatically pay.

Now you can pay any taxes you already owe from taxes. You
can pay everything right away or set up your bank account to automatically
withdraw money whenever you decide. This way you don’t have to log on every
month/two weeks/whatever to pay what you owe to the government.